Update on Cardone Capital
I wanted to write a few words about my update on Cardone Capital, and share with you how my investment is doing. I have seen quite a few negative videos about Cardone Capital and Grant Cardone. Many people are making videos and saying that the whole thing is a pyramid scheme and/or a scam.
I have only been invested in Cardone Capital for a short time and can only speak to what my personal experience has been. Since I am a new investor my experiences are unique to me and my situation.
Know what’s going on and read the documentation
When someone first invests money with a project like this it takes a little while for the funds to get transferred and applied to the investment. An investor will not earn any returns until said funds are actually applied to the investment. Your investment will begin accruing interest the day it clears escrow.
Beyond the time it takes to transfer and apply the funds there is going to be some more time on the back end to actually receive any dividends. Specifically it will take a new investor 60 days to start receiving dividend due to National Automated Clearinghouse Association (NACHA) regulations.
Additionally many dividends were suspended due to the COVID-19 pandemic. I do not think this is unreasonable due to the uncertainty surrounding the state of the economy. I am invested with more than one of these companies and they also have withheld dividends during this time.
It should be no surprise that the fund managers are going to take care of the debt service obligations first. If you are investing in these types of deals it is very important to understand how things will work in times like these. There are also likely some requirements in regards to the amount of cash reserves they are required to have on hand and the safe bet would have been to ensure that there was a large enough buffer to service the debt.
These deals are leveraged
Another common theme was concern about the amount of debt held on many of these projects. Something to understand about these deals is the way they are structured. To summarize it as quickly as possible, it goes something like this.
1. Buy an older property in a great location that may have a lower than average occupancy.
2. Increase the property value by making it look nicer, making upgrades or renovations, and add some amenities.
3. When the property is nicer and has better management the rents and occupancy are likely to go up.
Often times these deals are financed on an interest only loan. This gives investors more cash flow and when the term of the loan is up it can either be sold or refinanced. Sales prices are often tied to how well the property is performing, better performing real estate commands a higher price. This is a common strategy and it should not surprise anybody that Cardone Capital uses this strategy as well.
Before investing with one of these companies know what the policies are and know what your expected return will be. I am (so far) happy with my choice to invest with Cardone Capital as they have been the first ones to start paying dividends again.
It can be very frustrating to open your banking website and not see the dividends in your account. Always diversify your portfolio in the event of a dividend being suspended or cut. One final thing to remember is that these are investments, the greater the return generally means greater the risk and it is even possible to lose money on these deals.
This was my update on Cardone Capital please share this and leave a comment below.